Who Benefits When Money Printers Go Brrr? The 1% of Americans Whose Wealth Has Increased by $12T in 2 Years.

Inequality continues to grow, and this could result in a worst-case scenario.

Since the beginning of the COVID-19 pandemic, the central banks of the major economies have been printing fiat money out of thin air. So much so that the flaws of the current monetary and financial system have been highlighted as never before.

As the central bank of the world's largest economy, the Fed has led this trend. Some might ask who has benefited from this printing of fiat money out of thin air in unlimited quantities. I've already given this answer several times, but for those who were still in doubt, the Fed has just given figures that leave no room for hesitation.

The wealthiest Americans, such as Amazon chief Jeff Bezos, Tesla CEO Elon Musk, or star investor Warren Buffett, saw their wealth increase again in 2021. According to the Fed, the accumulated wealth of the richest 1% of Americans now stands at an insane $45.9 trillion. That's $6.5 trillion more than last year. Throughout the pandemic, this wealth has increased by $12 trillion.

The largest increase in 40 years

These numbers are insane. The boom in wealth during the pandemic is certainly approaching the largest increase in the last 40 years. According to Fed figures, the richest 1% of Americans owned about 32.2% of the total wealth of the United States in 2021.

The wealth held by the poorest 90% of the U.S. population decreased in 2021 compared to before the pandemic. In 2021, some 30.2% of all wealth was in the hands of the poorest 90%, compared to 30.5% before the pandemic.

However, the huge amounts of money of these super-rich Americans are not simply placed in their bank accounts. Most of this wealth is in stocks. According to the Fed, the portfolios of the 1% are worth about $23 trillion. This means that this group not only owns a large portion of the total wealth of the United States, but also the largest share of all stocks in the market. As much as 53.9% of all personally owned stocks are believed to be held by 1% of the U.S. population.

The stock market promotes inequality

Other than the richest 1% of Americans, no one is really happy about these numbers. Economists are very concerned about the increase in inequality. The fact that the wealthy are accumulating more and more of their wealth in stocks is also a red flag. According to economists, there is a feedback loop, a kind of vicious circle that fuels inequality.

As share ownership is concentrated in the hands of the richest, rising stock prices will generate even more money for the richest. The fact that the wealthiest can afford to invest in stocks, and thus engage in a form of saving, means that most of a country's wealth circulates only in the stock markets.

This circulation drives prices up again, and history repeats itself. Rising inequality drives stock markets, which in turn drive inequality. It is a vicious circle from which the poorest can never escape.

The corporate world is another source of income for the wealthiest Americans. Some 57% of all private companies in the United States are owned by the richest 1%. The value these companies brought in to the big earners has also skyrocketed, up 36% in the last year. That's $2.2 trillion by 2021.

The most pessimistic scenarios could come true in the future

For several years, economists around the world have warned of growing wealth inequality in the world. The pandemic has done little to improve inequality. Economists such as Thomas Piketty sketch out a doomsday scenario in which our society seems to be heading towards the old regime, in which a small group of "aristocrats" own almost all the wealth, and all innovation comes to a halt because all value-added disappears into the pockets of the big earners.

According to Piketty, to save capitalism and liberal democracy from imminent death, radical changes must be made to our tax system and capital markets. The central elements are a radically progressive income tax, a capital tax, and increased transparency.